State: Long Beach, Valley Stream, Island Park under fiscal stress

Three Nassau County municipalities ended their 2020 fiscal years in significant fiscal stress, state officials said in a report.

The City of Long Beach remained on the state comptroller’s list of municipalities under significant stress albeit with a slightly improved score compared with last year, according to its assessment system. The villages of Valley Stream and Island Park, however, saw their existing stress level deteriorate. The three municipalities were among eight statewide — whose fiscal years end between Feb. 28 and July 31 — that were identified by Comptroller Thomas DiNapoli’s office on April 2 as being under stress or susceptible to stress.

"These local communities were already struggling with fiscal stress before the pandemic hit," DiNapoli said in a news release. "Some of that pressure could be alleviated with federal stimulus funds and the restoration of state aid, but the full extent of the pandemic’s impact on local communities is unclear and the fiscal landscape continues to change."

The comptroller’s office scores local governments’ level of fiscal stress by measuring the most recent year's fund balances and three years of financial data, such as operating deficits, cash flow borrowing and debt service.

Long Beach continued to be designated as being under significant fiscal stress even as the city’s score improved slightly compared with the previous year after total fund balances turned positive and the elimination of an operating deficit in 2020.

"The fact that we are moving in the right direction in the times of COVID speaks volumes about where we’re headed financially," Long Beach Comptroller Inna Reznik said in an interview Monday.

Island Park’s fiscal stress designation got worse in 2020, jumping to "significant" from "susceptible" in 2019. Island Park Mayor Michael McGinty blamed the pandemic.

"The COVID situation made life virtually impossible not just for the village of Island Park, but I suspect for every municipality in the county," McGinty said in an interview Monday.

In a normal year the village brings in about $300,000 in revenue from annual parking permits for Long Island Rail Road commuters but that went down sharply last year because "people did not renew their parking permits," McGinty said. Revenue from village court fines for everything from code enforcement to parking tickets went down from $15,000 to $19,000 a month to zero because the village court stopped operating, he said. Building permit fees also dropped off because construction projects couldn’t move ahead because of pandemic restrictions, he said.

McGinty said the fiscal hit from COVID-19 was a "glitch" that "we will correct … in the upcoming budget cycle."

A call to Valley Stream officials was not returned Monday.

Moody’s Investors Service last month revised Valley Stream’s credit rating to stable from negative though it remains in junk status at Ba1. Moody’s downgraded the village to junk in 2019. Last month, Moody’s wrote in a report that "while the village's cash position remains more favorable than its fund balance, the prospects for a return to broadly healthy finances over the next few years are limited." Moody’s noted that on the positive side "the village has halted the declines and has regained some measure of structural balance."